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Economy

Hedge Funds To Dump Another $200 Billion In Assets

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By Douglas A. McIntyre Updated Published
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95129c_2One of the culprits that analysts point to as a cause of the falling stock market is hedge funds which have to pay back money owed to banks and cover redemptions by their shareholders.

The process may only be half way over.

According to Bloomberg, "Hedge funds are about halfway done selling securities to reduce their use of borrowed money and may unload $200 billion more to complete the process, say managers surveyed by Sanford C. Bernstein & Co. "

Despite the market recovery fueled by the Citigroup bailout today, the downward pressure from institutional sales is likely to remain powerful. Hedge funds are just one of several industry players faced with a need to cover redemptions and a rapidly falling asset base. Mutual fund companies are also being hit by customers withdrawing money. The layoffs in that part of the financial world are piling up as large fund firms have less and less capital to manage.

Until the data from Bernstein and other research firms which track hedge funds shows that selling is slowing, the market faces a push to a new bottom.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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